2010 Junior Achievement Essay Competition

Jingran Wang
Richard Montgomery High School
12th Grade
Rockville, MD
Maryland – 3rd Place Winner

The Bonds of Business

    Night, like a raven, descends upon the metropolis in silence, her pitch-black wings spread across the vast, desolate heavens. Below, a gust ruffles the Potomac’s frigid waters, and the iconic monuments, lit ghost-white, reflect perilously in the inky ripples of the Tidal Basin.

    So begin business hours in Washington. Under the winking stars, ensconced in a downtown restaurant, corporate executives celebrate a renewed alliance with booming laughter and the exquisite clink of champagne glasses. Nearby, an entrepreneur captivates her audience of venture capitalists with a voice that soars with rarefied eloquence and plunges into hushed, conspiratorial whispers. Such are the sounds of business in Greater Washington, where deft navigation of the region’s networks promises a generous share of its $443 billion economy¹– as K Street powerhouses undoubtedly attest.

    Fortunately, a societal emphasis on leadership and advancements in communications technology have conditioned today’s high school students into social mavens. A glance at a student’s Facebook friends reveals a collection of relationships overwhelming in its sheer volume and breathtaking in its unparalleled diversity. Consequently, the Greater Washington business community should learn from students how to build and capitalize upon relationships.

    Cherished beyond almost all other high school relationships is that with a best friend, the one who chuckles at your stubborn foibles and knows your most intimate of secrets. Likewise, area businesses ought to forge lasting partnerships with counterparts that offer complementary goods or services. For example, on a window in Rockville hangs an advertisement: “A burrito. A drink. A movie. All for $13.99.” In a interview, the cinema manager confirmed not only that Regal Theatres and California Tortilla agreed to package their products at a discount but also that this deal accounts for “30 to 40%” of ticket sales². The benefits of collaboration, however, transcend a single revenue stream. First, each firm incentivizes its customers to patronize the partner firm, thereby expanding both firms’ clientele and enticing new customers to return in the future. Furthermore, movie theatres confront quality substitutes in Netflix and cable television, just as interchangeable restaurants abound in Rockville Town Center. Such a high degree of substitutability produces a correspondingly high price elasticity of demand, a condition under which a price decrease, like the joint discount, bolsters both firms’ total revenues. For the theatre in particular, since each new customer incurs a negligible marginal cost, almost every additional dollar of revenue distills into pure profit.

    Acts of trust, such as lending friends sorely needed lunch money, deepen even the best friendships. Similarly, to extend the previous example, the restaurant could accept delayed payments from the theater when the latter purchases 3D screens. Effectively a short-term, interest-free loan, delayed payments improve cash flow because they temporarily inflate the theater’s cash reserves and thereby directly facilitate costly investments. Alternatively, a trusting firm can co-sign its partner’s loan, which mitigates the creditor’s exposure to risk, reduces the interest rate, and frees up capital for the partner business. Whatever the method, the resultant improvement in product quality and customer experience brightens the prospects of both intertwined firms. These synergetic successes can be extrapolated to merchants of complementary products across Greater Washington – the car dealerships and nearby auto body shops along 355 come to mind – but only if they embrace new friends.

    Not all relationships are so amicable. When senior year ends, there will stand only one prom queen, one star quarterback, and one valedictorian: the dozens of viable candidates must strive for personal superiority or fall into muddled obscurity. Area businesses, especially firms under monopolistic competition, should demonstrate the same individualism in order to differentiate their products and capture greater market share. From Lavender Moon Cupcakery in Alexandria to Nostalgia Cupcake in Annapolis, bold flavors, loyalty discounts, and environmental awareness are not so much idiosyncrasies as quaint motifs in the saturated market. Instead, like a prom queen candidate who spends Friday nights performing community service, local “cupcakeries” should adopt unorthodox strategies.

    For example, Georgetown Cupcake could instate – for its annual charitable sale – pay-as-you-wish pricing with the qualification that 50% of proceeds go to the Susan G. Komen Foundation. First, freeloading tendencies would be curtailed, though not outright eliminated, by the stigma of exploiting charity for personal gain. Furthermore, even payments below market price increase profits as long as marginal revenue exceeds marginal cost, a cost which is depressed by the economies of scale achieved by the high volume of pay-as-you-wish sales. Lastly, the pay-as-you-wish model enables altruists to contribute double or triple the market price; consequently, a single altruistic purchase offsets losses incurred from multiple freeloaders. As a temporary novelty, modified pay-as-you-wish pricing, at worst, replicates the losses of the current model in which 100% of sales goes to the foundation. At best, the new model maximizes the financial benefit of both the firm and breast cancer research, in addition to burnishing the company’s brand amongst the critical demographic of young and professional women.

    Neither friend nor competitor, high school love interests cause hearts to alternatively race faster than Strasburg’s fastball and plummet lower than Metro’s honeycombed tunnels. Just as students weather the vagaries of romance, businesses ought to pursue passionately the region’s entrepreneurial opportunities while braving occasional downturns. The federal government, headquartered in Greater Washington, plays the fickle lover, wooing local entrepreneurs with $76.5 billion infused directly in our region³ and three local Small Business Development Centers. Yet, it can also leave entrepreneurs as frustrated as tourists searching for J Street in DC⁴; the proposed contraction of the Pentagon’s budget clouds the future of Crystal City’s defense contractors and looms over Northern Virginia’s entire business community. Emulating students who overcome heartbreak through rigorous introspection, affected firms should centralize management to cut overhead expenses, consolidate redundant divisions, and, as a last resort, divest marketable business units without compromising future growth.

    In junior year romances as in business, resourcefulness yields new opportunities. Just as students use homecoming and prom to kindle romance, entrepreneurs should take advantage of the region’s business-friendly atmosphere. State governments insulate business from the recession through modest taxes: Virginia offers a 6% corporate income tax⁵ while Maryland exempts intangible property from taxation⁶. In the private sector, corporations including hospitality empire Hilton, insurance giant GEICO, and Bethesda-based Lockheed Martin headquarter in Greater Washington. They are allured by the nation’s highest concentration of scientists and engineers⁷ and most educated workforce⁸, much of which graduated from local institutions such as George Washington and Johns Hopkins. Medium-sized businesses should capitalize upon the region’s access to lucrative markets and low-cost suppliers, since “20% of the world’s GDP is produced within a two-hour flight of Greater Washington”⁹. For the corner boutique dependent on consumer spending, the region’s low 7% unemployment and stratospheric household income, averaging $85,824 and ranked first nationally¹⁰, are go-go music¹¹ to the ears.

    Reciprocity, too, stokes the fire of youthful love, as it does the prospects of budding businesses. Local firms should advocate the timely completion of the ICC, I-95 High-Speed Rail Corridor, and the Purple and Silver Lines, all of which would slash shipping costs of raw materials and finished goods and provide access to productive employees. In return, business along the Dulles Technology corridor and biotechnology firms dotting I-270 provide research opportunities for local students and attract the world’s most innovative minds, demonstrating that, like high school sweethearts, businesses and Greater Washington share a bright, interdependent future.

    My friend Codi Alexander begins the final lesson. She excelled in soccer, nurtured her siblings, and loved to laugh; her life was blessed until August 5th, 2009. That afternoon, while Codi was bicycling along Great Seneca Highway, she was struck by a SUV and quickly hospitalized. Despite intensive care, Codi died five days later. Her friend Sarah¹³ had every right to be consumed by grief, to hurl herself into her room and cry her pain into her pillow. No one would have blamed her. Sarah knew, however, that others suffered as much as she, some even more. So, she wove a white quilt for Codi’s family and invited each student to decorate one square. Hundreds of memories, signatures, and condolences flooded the quilt which, to this day, remains in the Alexanders’ home.

    Sarah’s spirit, if not her specific example, inspires a hardware store owner in Arlington to bear stoically the crushing cost of employee healthcare. He might not know that, otherwise, a loyal employee would be forced to choose between the family’s mortgage and his wife’s chemotherapy. He might not know that, without insurance, the family would have endured winters under thin blankets or long, restless nights on grumbling stomachs. He might never know. His unheralded sacrifice, however, ensures that a mother will triumph over cancer, live to see her son wave farewell from the footsteps of his dormitory, and, years later, shed tender tears of joy when her granddaughter mumbles “Grandma” for the first time. Sarah reminds local businesses and individuals to pause and consider our relationship with humanity, a relationship measured not by the names we know, but by the lives we touch.

Endnotes

1. Johnson, Stephen. "DC Area Poised to Excel Post-recession, Report Says." TechJournal South. 11 July 2010. Web. 30 Aug. 2010. http://www.techjournalsouth.com/2010/06/dc-area-poised-to-excell-post-recession-report-says/.
2. “Forging Bonds." Personal interview. 12 Aug. 2010.
3. Greater Washington 2010 Regional Report. Economic Development, Greater Washington Initiative. Washington DC, 2010. Retrieved 28 Aug. 2010. http://www.greaterwashington.org/Portals/1/PDFs/GWI_RR10_final.pdf
4. There is no J Street in DC.
5. "Business Tax Rate." Virginia Economic Development Partnership - Business Location and Site Selection Services Economic Development. Web. 10 Sept. 2010. http://www.yesvirginia.org/whyvirginia/financial_advantages/stable_taxes.aspx.
6. Marsh, John. "Facts and States." ChooseMaryland. Web. 9 Sept. 2010. http://www.choosemaryland.org/factsstats/Pages/default.aspx.
7. Vradenburg, George, and Herb Miller. "A New Vision For Our Region: Innovation Hub." The Washington Post 19 Apr. 2010. The Washington Post. Web.
8. Greater Washington 2010 Regional Report. 6.
9. Greater Washington 2010 Regional Report. 23.
10. Greater Washington 2010 Regional Report. 27.
11. A subgenre of music that originated in DC.
12. Hahn, Fritz. "National Harbor's Lounge Act." The Washington Post 4 July 2008. Web. http://www.washingtonpost.com/wp-dyn/content/article/2008/07/03/AR2008070301147.html.
13. Not actual name